Have you been keeping an eye on Reinsurance Group of America Incorporated’s (NYSE:RGA) upcoming dividend of US$0.60 per share payable on the 28 August 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 06 August 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Reinsurance Group of America’s most recent financial data to examine its dividend characteristics in more detail.
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How does Reinsurance Group of America fare?
The current trailing twelve-month payout ratio for the stock is 7.36%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 18.63%, leading to a dividend yield of around 1.70%. However, EPS is forecasted to fall to $11.94 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of RGA it has increased its DPS from $0.36 to $2.4 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, Reinsurance Group of America has a yield of 1.70%, which is on the low-side for Insurance stocks.
Keeping in mind the dividend characteristics above, Reinsurance Group of America is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for RGA’s future growth? Take a look at our free research report of analyst consensus for RGA’s outlook.
- Valuation: What is RGA worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether RGA is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.